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Selling a property that was in alojamento local: 5 rules so you do not pay IRS on twice the capital gain
Step Inside Accounting · Practical guide
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1. While it is in alojamento local, the property is part of the activity
When you assign a property to alojamento local, it becomes part of your activity. If you sell it at that point, the gain is business income – the same category as recibos verdes – and not a capital gain on a personal asset.
Under the simplified regime, this means that 95% of the gain is added to your other income and taxed at the normal IRS rates. In addition, the wear and tear for the years it was in the activity is deducted from the cost of the property, which increases the gain.
2. When you end the activity, the property returns to your personal assets
When you close your alojamento local – or stop using that property in the activity – it returns to your personal assets. At that moment you pay no tax: the gain is only taxed when you sell to a third party.
But the transfer has to be recorded. Report the closure to the Tax Authority within 30 days and declare that the property has left the activity in your IRS return for that year. That date is what counts for the next rule.
3. Sale within the following three years: taxed as if the property were still in the activity
If you sell the property before three years have passed since it left the activity, the gain is still treated as business income. Under the simplified regime, 95% of the gain is taxed, as if it had never left.
The rule exists to stop someone from taking the property out of the activity just to sell it straight afterwards with half the tax.
4. Sale after three years: only half the gain counts
Once the three years have passed, the sale follows the rules for capital gains on personal property. If you are resident in Portugal, only 50% of the gain is added to your other income. And if you have owned the property for more than two years, the purchase cost is updated for inflation, which reduces the gain.
As expenses, the IMT and stamp duty paid on the purchase, the sale commissions and improvement works with invoices count. Works carried out while the property was in alojamento local do not count.
5. Plan the date of the sale
The difference between selling before and after the three years can amount to thousands of euros. Before you accept an offer:
- check the date on which the property left the activity;
- calculate the gain in both scenarios;
- see whether it is worth waiting, taking into account the market and the costs of keeping the property.
If the property has become your permanent home, or if you want to reinvest the money in another home to live in, the rules may be different: talk to us before you sign the promissory contract.
Example
Luís bought an apartment for €200,000 and had it in alojamento local until he closed the activity on 31 December 2025. He receives an offer of €320,000. To keep it simple, the gain is €120,000 (we do not count wear and tear, the inflation update or expenses).
- If he sells in 2027, before three years have passed: €114,000 is added to his income (95% of €120,000).
- If he sells from January 2029, after the three years: €60,000 is added to his income (50% of €120,000), even before the inflation update.
Waiting reduces his income subject to IRS by €54,000. As these amounts fall into the highest brackets, the saving can exceed €25,000.
Team tip
If you are thinking of selling a property you have in alojamento local, talk to us before you close the activity. The date of closure starts the three-year count, and a plan made in good time can halve the tax.
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This article is for information only and does not replace professional advice. Figures and rules are those in force at the date of publication and may change.
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